NZX CURRENT STRATEGY
NZX SEEMS TO BE OPERATING IN CONTRAST TO WHAT WAS ARTICULATED IN THE FIVE YEAR STRATEGIC PLAN ■
NZX management stated their need to ”refocus” on their core markets business to establish itself as “New Zealand’s Exchange”. In our opinion, NZX should really aim to become “New Zealand’s Marketplace for Capital”.
After reviewing the current strategic plan, we still believe that Management continues to be distracted by the non-core activities:
Running a subscale KiwiSaver/Superannuation funds management business that feeds into NZX’s own subscale ETF funds business.
Continued focus on the poorly executed multi-year/delayed software development project for its fund administration platform.
We also believe NZX is too optimistic with its ability to execute its “go-it-alone” growth strategy in dairy derivatives. Our view is supported by NZX’s recent downgrade of its expectation/s for its 2018 volume target range from 400,000 - 500,000 lots to 300,000 - 400,000 lots in its 1H 2018 results presentation (released on 15 August 2018).
Lastly, we note the irony in its statement that NZX is “too small to be fat” when NZX increased the size of its Executive Team by approximately 45% in 2017*.
Source: NZX 2017 Results Presentation - 19 February 2018 - p12
Source: NZX 1H 2018 Results Presentation - 15 August 2018 - p5
* The calculation is based on the 16 officers in 2017 (NZX 2017 Annual Report p29) versus the 11 officers in 2016 (NZX 2016 Annual Report p31)